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While yesterday’s supply chains were focused on the availability, movement and cost of physical assets, today’s supply chains are about the management of data, services and products bundled into solutions. Modern supply chain management systems are about much more than just where and when. Supply chain management affects product and service quality, delivery,
costs, customer experience and ultimately, profitability.

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    What is a Supply Chain?Why Should A Company Understand Its Supply Chain?Supply Chain ExamplesMore Related ResourcesWhat refers to all of the individuals and organizations that move goods from the sources of raw materials to ultimate consumers?What is the sale of goods and services by telephone?What are the 5 types of supply chain?What is supply chain process?

As recently as 2022, a typical supply chain accessed 50 times more data than just five years earlier. However, less than a quarter of this data is being analyzed.  That means the value of critical, time-sensitive data — such as information about weather, sudden labor shortages, political unrest and microbursts in demand — can be lost.

Modern supply chains take advantage of massive amounts of data generated by
the chain process and are curated by analytical experts and data scientists. Future supply chain leaders and the Enterprise Resource Planning (ERP) systems they manage will likely focus on optimizing the usefulness of this data — analyzing it in real time with minimal latency.

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An entire system of producing and delivering a product or service, from sourcing the raw materials to the final delivery of the product or service to end users

What is a Supply Chain?

A supply chain is an entire system of producing and delivering a product or service, from the very beginning stage of sourcing the raw materials to the final delivery of the product or service to end-users. The supply chain lays out all aspects of the production process,
including the activities involved each stage, information that is being communicated, natural resources that are transformed into useful materials, human resources, and other components that go into the finished product or service.

Why Should A Company Understand Its Supply Chain?

Mapping out a supply chain is one of the critical steps in performing an
external analysis in a strategic planning process. The importance of clearly laying out the supply chain is that it helps a company define its own market and decide where it wants to be in the future. In developing
corporate-level strategies, a company often needs to make decisions on whether to operate a single line of business or enter into other related or unrelated industries.

Each stage of a supply chain is essentially a different industry, for example, raw material extraction and manufacturing. The supply chain enables a company to understand others that are involved in each of
the stages, and thereby provides some insights on the attractiveness or competitiveness in industries the company might want to enter in the future.

Supply Chain Examples

Let’s look two different examples of a supply chain.

Generic Supply Chain

The generic supply chain begins with the sourcing and extraction of raw materials. The raw materials are then taken by a logistics provider to a supplier, which acts as the wholesaler. The materials are taken to a
manufacturer, or probably to various manufacturers that refine and process them into a finished product.

Afterward, it goes to a distributor that wholesales the finished product, which is next delivered to a retailer. The retailer sells the product in a store to consumers. Once the consumer buys it, this completes the cycle, but it’s the demand that then goes back and drives the production of more raw materials, and the cycle continues.

Supply Chain for an e-Commerce Company

In this example, the e-commerce company operates a website, and that website sells various products. When a customer places an order for a product, the product order is being processed by technology such as a checkout cart, an order system, or a third-party product such as Shopify. The payment processors then
come in and giảm giá with payment transactions for the order, which actually opens up a new supply chain.

The payment processors use their own systems but, in most cases, third parties such as PayPal and Stripe are employed, and they involve banks and other providers. When a product order is placed, the warehouse receives the order and ensures the product is ready for delivery. The
warehousing company can be either in-house or a third-party logistics provider.

The order then goes from the warehouse to the shipping company. Once again, the shipping may be in-house or a third-party shipping company. After shipping, the package arrives the customer’s door and the customer receives it.

Thank you for visiting our resource on supply chains. To learn more about external analysis and how to perform strategic analysis, enroll in our Corporate & Business Strategy course today!

Additional relevant CFI resources include:

    Bargaining Power of BuyersBargaining Power of SuppliersExternal AnalysisAll Strategy Resources

What refers to all of the individuals and organizations that move goods from the sources of raw materials to ultimate consumers?

Organizations that assist in moving goods and services from producers to business and consumer users are called financial intermediaries.

What is the sale of goods and services by telephone?

Telemarketing is the direct marketing of goods or services to potential customers over the telephone or the internet. Four common kinds of telemarketing include outbound calls, inbound calls, lead generation, and sales calls.

What are the 5 types of supply chain?

The Top-level of this model has five different processes which are also known as components of Supply Chain Management – Plan, Source, Make, Deliver and Return.

What is supply chain process?

Supply chain management is the process of delivering a product from raw material to the consumer. It includes supply planning, product planning, demand planning, sales and operations planning, and supply management.
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